On 23 October 2023, the General Department of Taxation (“GDT”) has recently issued Instruction No. 37444 on Method of Calculating Tax On Local Non-Alcoholic Beverage Producers (“Instruction 37444”).

Objective

The purpose of Instruction 37444 is to provide a detailed calculation method of excise tax and value added tax applicable to certain locally produced non-alcoholic beverage products. This instruction is issued pursuant to Sub decree No. 122 dated 6 June 2023 on Adjustment of Custom Tariff Rate, Excise Tax, and Export Tax on Certain Goods and following notification No. 28271 dated 15 August 2023 on Adjustment of Excise Tax Rate on Locally Produced Non-Alcoholic Beverage Products.

Calculations

A. In case of using Tax Invoice

In case of issuing tax invoices to local taxpayers, the enterprise shall calculate the excise tax first and then calculate the value-added tax. Each tax shall be calculated as follows:

1. Excise tax = 90% x (multiply) supply value in invoice (supply value excluding all taxes) x (multiply) excise tax rate
2. VAT = [supply value in invoice (supply value excluding all taxes) +(plus) Excise tax] x (multiply) VAT rate

B. In the case of a commercial invoice

In case of issuing commercial invoice, which means that all taxes are already included in the sale price, the tax calculation must be reversed from the above calculation method. The enterprise shall calculate value-added tax first and then calculate excise tax. Each tax shall be calculated as follows:

1. Value-added Tax (VAT)

Value-added tax base = sale price (inclusive of all taxes) ÷ (divide) ( 1 +(multiply) VAT rate)

Value-added tax = value-added tax base x (multiply) VAT rate

2. Excise tax

Excise tax base = 90% x (multiply) {value-added tax (VAT) ÷ (divide) [1+(plus) (90% x value-added tax rate)}]

Excise tax = Excise tax base x (multiply) excise tax rate